The government today said the economy was on track to achieve the official growth target of between five to six percent in 2005 despite skyrocketing oil prices.

"We are in good shape, we are in good health, we are on track for five percent despite fairly unfavourable developments," Economic Planning Minister Mustapa Mohamed said.

"Exports have been growing rapidly and are still very credible. Overall things look all right, there is nothing of serious concern at the moment," Mustapa, who is also executive director of the government's National Economic Action Council, was quoted as saying by the official Bernama news agency.

The economy grew 4.1 percent year-on-year in the three months to June after 5.8 percent in the first quarter due to declines in the manufacturing and mining sectors, according to recent central bank figures.

Oil prices hit an all-time high of 70.85 dollars a barrel in Asian trade last week amid concerns of damage to US crude production in the aftermath of Hurricane Katrina. It has since fallen to below 67 dollars a barrel.

When asked about concerns of inflation due to higher global oil prices, Mustapa said that the central bank was monitoring the situation closely.

Bank Negara governor Zeti Akhtar Aziz has warned that full-year inflation could be higer than the projected 2.8 percent if oil prices increased more than expected.